UPDATE 2-Ashtead to buy back shares, full-year profit beats estimates

(Adds CEO, analyst comments, details, share movement)
By Esha Vaish
June 14 (Reuters) - Ashtead Group Plc AHT.L announced a
share buyback of up to 200 million pounds ($284 million) for the
current financial year, after strong North American growth
helped the industrial equipment hire group beat full-year profit
estimates.
The company also raised its full-year dividend by 48 percent
to 22.5 pence, citing expectations of significant free cash flow
generation due to strong margins and lower costs for fleet
replacement in the current year.
Shares in Ashtead, which hires out diggers and tools on
short-term contracts, rose almost 4 percent, making it the top
percentage gainer on London's bluechip .FTSE index.
The company said it expected "good" earnings growth, as
seasonally higher demand for fleet on rent seen during spring
had continued into the new financial year.
Chief Executive Geoff Drabble told Reuters that the company
expected capital expenditure to grow by double digits to
mid-teens in North America and by mid- to high-single digits in
the UK.
"Two-thirds of our growth continues to be structural growth,
not market growth, so we will grow as we open new locations,
take market share and as our customers choose to rent rather
than own," he said.
The London-listed firm has greatly benefited from the
rebound in U.S. construction markets, particularly in the
private sector.
That has helped it outperform rivals with more exposure to
the struggling oil and gas sectors, including U.S. peer United
Rentals Inc URI.N , which forecast adjusted core earnings lower
than some analysts' estimates, citing concerns over its oil and
gas and Canada businesses.
However, U.S. construction spending recorded its biggest
decline in more than five years in April. Ashtead makes about
half of its revenue from the construction sector.
"I think the end market growth will be a percent or two less
than it was, but it will still be good growth," Geoff said,
declining to give specifics about an earnings target.
Brokerage Jefferies retained its pretax profit estimate of
691 million pounds for the current year ending April 2017.
On Tuesday, Ashtead also reported a 24 percent rise in
pretax profit at constant currency to 645.3 million pounds for
the year ended April 30. This came in ahead of analysts'
estimate of 620.1 million pounds, according to a
company-compiled consensus.
Rental revenue at constant currency rose 17 percent to 2.26
billion pounds. The reported figure stood at 2.54 billion
pounds.
Ashtead's U.S. division Sunbelt, which accounts for about 86
percent of revenue, reported a 27 percent rise to 2.18 billion
pounds.
The company's shares were up 0.7 percent at 964 pence at
0926 GMT, outperforming the FTSE 100, which was down 1.4
percent.
($1 = 0.7053 pounds)